📦Shipping Test Use Cases

The goal of shipping testing is to optimize shipping strategies to maximize conversion rates, average order value (AOV), and overall revenue.

Determining Free Shipping Threshold

You might want to find the optimal free shipping threshold that encourages customers to increase their cart value without significantly impacting your profit margins. This test can help you understand how different thresholds affect customer behavior.

Example Scenario

Control Threshold	Free shipping for orders over $30
Test Threshold 1	Free shipping for orders over $50
Test Threshold 2	Free shipping for orders over $75

Potential Outcomes and Actions

The main metrics to focus on are Conversion Rate, Average Order Value, and Profit per View.

1. Lower Threshold:

   • Outcome: Higher conversion rate but potentially lower AOV.

   • Action: If the increase in conversions offsets the reduced shipping revenue, consider implementing this threshold.

2. Medium Threshold:

   • Outcome: Balanced conversion rate and AOV.

   • Action: This might be the optimal point if it maximizes overall revenue while maintaining a good conversion rate.

3. Higher Threshold:

   • Outcome: Lower conversion rate but higher AOV.

   • Action: If the increase in AOV significantly boosts overall revenue despite lower conversions, this threshold could be beneficial.

Optimizing Flat Rate Shipping

Testing different flat rate shipping prices can help you find the highest price customers are willing to pay without negatively impacting conversion rates.

Example Scenario

You want to test if increasing your flat rate shipping price impacts your conversion rate and overall revenue.

Control Rate	$5.99
Test Rate 1	$7.99
Test Rate 2	$9.99

Potential Outcomes and Actions

Focus on Conversion Rate, Profit per View, and the Rate Seen metric (which shows how often each shipping rate is viewed by customers).

1. If conversion rates remain stable across higher prices:

   • Consider implementing the higher shipping rate to increase profit margins.

2. If conversion rates drop significantly at higher prices:

   • Find the balance between increased shipping revenue and maintaining conversion rates.

3. If the Rate Seen metric is high but conversion rates are low:

   • Customers frequently see a higher shipping rate but don't complete the purchase, it might indicate that the rate is too high for their liking. Consider lowering the rate to potentially increase conversion.

Improving Profitability with Advanced Shipping Rate

For businesses with varied product weights or order values, testing with advanced shipping rates can help optimize shipping costs and maintain profitability.

Example Scenario

You want to test different shipping rate structures based on weight.

Control Rate	Flat $9.99 for all orders
Test Rate	$5.99 for orders under 5lbs, $9.99 for orders over 5lbs

Potential Outcomes and Actions

Monitor Conversion Rate, AOV, and overall Revenue. Also, pay attention to the distribution of order weights or values.

1. If the Test Rate better aligns shipping costs with actual shipping expenses:

   • This could help maintain margins on heavier items while keeping shipping attractive for lighter orders.

2. If the control performs best:

   • The simplicity of a flat rate might be preferred by customers. Consider whether the operational simplicity outweighs potential gains.

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Remember to run tests for a sufficient duration to gather statistically significant data. Always consider the broader impact on customer experience and operational costs when implementing changes based on test results.